Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Airbus: Global services sector to double by 2042 December 4, 2023
- Harvest season at Embraer December 4, 2023
- Bjorn’s Corner: New aircraft technologies. Part 40. The initial production crisis December 1, 2023
- The Exception to the Green Propulsion Rule November 30, 2023
- Rolls-Royce sets out ambitious vision to future-proof its business November 29, 2023
Boeing beats Airbus in order tallies at Dubai Airshow thanks to widebody jetliner demand
By Dan Catchpole
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Nov. 20, 2023 © Leeham News: Boeing dominated the Dubai Airshow, racking up 313 orders—232 firm and 81 non-firm. Meanwhile, Airbus garnered only 86 orders, as of Friday, the last day of the biennial airshow.
Credit: Boeing
It was the first time that American aerospace giant has beaten its European competitor at Dubai since 2017. Heavy demand for twin-aisle aircraft helped Boeing land more orders.
A much anticipated mega order by Turkish Airlines for Airbus jetliners didn’t materialize. However, both entities said they plan to announce a significant order in the future.
Summary
- Widebody orders lead narrowbody orders
- Resurgent international travel demand drive order split
- Performance problems soften demand for Airbus A350
Airbus eyes carbon capture to broaden its eco arsenal
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By Gordon Smith
November 20, 2023, © Leeham News: Airbus’ flagship decarbonization initiative appears to be gaining momentum. The European OEM is betting big on Direct Air Carbon Capture and Storage (DAC) next-generation facilities that remove CO2 directly from the air to compensate for emissions produced by airline operations.
Airbus has described the technology as a “key bastion in the fight against climate change and the world’s transition to a net-zero energy system”. It has partnered with 1PointFive – a US partner of Canadian firm Carbon Engineering – to bring the innovative system to the aviation sector.
Last month, easyJet became the first airline to ink a deal with Airbus for the decarbonisation initiative. The OEM is offering carriers ‘carbon removal credits’ as part of a broader deal with 1PointFive. Read more
Bjorn’s Corner: New aircraft technologies. Part 38. Flight tests
By Bjorn Fehrm
November 17, 2023, ©. Leeham News: We are discussing the different design phases of an airliner development program. After covering Conceptual, Preliminary, and Detailed design and the manufacturing of prototypes and their roles, we now look deeper at the flight test phase.
Figure 1. The flight test fleet for the certification of a new airliner. Source: Leeham Co.
Further developments of the A321, Part 5
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By Bjorn Fehrm
November 16, 2023, © Leeham News: We have done an article series about what can be the subsequent development for Airbus’ most popular aircraft, the A321neo. We looked at different changes to the aircraft in previous articles. Now, we compare the capacity and economics of the different variants.
We use our Airliner Performance and Cost Model (APCM) to examine passenger capacity, range, and seat-mile costs.
Summary:
- The stretched A321s have improved operating economics.
- The question is if the cost and time of the projects are motivated versus keeping the A321s “as is” and then make a clean sheet replacement.
Has Airbus pinned too much of its hopes on LCC growth?
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By Judson Rollins
November 14, 2023, © Leeham News: Much ink has been spilled over the bad – and increasingly worse – year for America’s low-cost carriers or LCCs. Frontier, JetBlue, Southwest, and Spirit have all reported disappointing results, with increasingly negative outlooks for the rest of this year and well into 2024.
Source: DigitalAirliners.com.
The future of the LCC model is increasingly murky, having historically depended on consistent double-digit capacity growth to spread fixed costs. Such rapid growth is imperiled in the short term by reluctant lower-income consumers, in the intermediate term by shortages of airplanes, parts, and skilled staff, and in the long term by a growing worldwide pilot shortage.
Boeing’s 737 MAX has its share of LCC exposure; LNA analysis puts it at 37% of unfilled orders. But Airbus’s A220 and A320 programs are even more intensely exposed, with 48% of combined orders coming from LCCs.
Will Airbus’s focus on selling to LCCs eventually return to haunt the OEM? We take a closer look.
Summary
- US LCCs are hampered by excess capacity; is a shakeout coming?
- Europe is brighter for now but faces near- and long-term constraints.
- Airbus has more to lose than Boeing in a global LCC retreat.
SR Technics navigates surge in MRO demand, bridge to new-gen engines
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By Judson Rollins
November 13, 2023, © Leeham News: On the sidelines of last month’s Aviation Week MRO Europe conference, LNA sat down with Matthias Düllmann, CEO of engine MRO provider SR Technics.
Düllmann spoke at length about how the company is coping with ongoing supply chain issues while adding support for GTF and LEAP engines. He also discussed the recent AOG Technics undocumented parts scandal, staff retention, sustainability, and aviation’s public image.
Matthias Düllmann. Credit: SR Technics.
Summary
- Supply chain issues persist, even for legacy engine parts.
- Supplier approval processes offer protection from unscrupulous suppliers.
- Staff recruiting and retention are growing concerns.
- Sustainability is a key pillar to keep aviation attractive as an employer.
Bjorn’s Corner: New aircraft technologies. Part 38. Flight test aircraft
By Bjorn Fehrm
November 10, 2023, ©. Leeham News: We are discussing the different design phases of an airliner development program. After covering Conceptual, Preliminary, and Detailed design, we now discuss prototype manufacturing and testing.
Today, we look at the different flight test aircraft needed and their roles.
Figure 1. The development plan for a new airliner. Source: Leeham Co.
Airbus profits climb despite one-off charge
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By Gordon Smith
Nov 9, 2023, (c) Leeham News: Airbus struck a defiant tone on Wednesday as the company posted strong numbers for the first nine months of 2023. Despite supply chain headwinds, the European firm’s Q323 adjusted Earnings Before Interest and Taxes (EBIT) rose by 21% year-on-year to €1.013bn. The figure was influenced by increased commercial aircraft deliveries and the positive impact of currency hedging.
The robust performance of its civil portfolio was dampened by a net loss at Airbus’ Defence & Space division. The group took a hit of €400m relating to “updated estimates at the completion of certain satellite development programs” which were mainly recorded in the third quarter.
The headline figures for the first nine months of 2023 are as follows:
- Revenues: €42.6bn
- Adjusted EBIT: €3.6bn
- Free cash flow (before Mergers and Acquisitions (M&A) and customer financing): €1.0bn
- 488 commercial aircraft delivered
For context, let’s compare these figures with those published at the same time last year. In its nine-month results for 2022, the OEM delivered 437 commercial aircraft, with revenues of €38.1bn generating an adjusted EBIT of €3.5bn. Free cash flow comprised €2.9bn.
Speaking during a follow-up investor call, Airbus CEO Guillaume Faury was bullish in his assessment. He said that the company is confirming its earnings target for 2023 and would be ramping up aircraft production in the years ahead: “We think we are well-placed to deliver around 161 planes to fulfill the guidance for the year. For those deliveries, we obviously have a high degree of visibility on parts, including engines.”
Faury’s positive outlook appeared slightly at odds with comments from other industry heavyweights in recent days. On Tuesday, Steven Udvar-Hazy from Air Lease Corporation suggested OEMs could miss their year-end goals as chronic engine supply issues persist.
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Maintenance cost, availability are growing concerns for OEMs, airlines
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By Judson Rollins
November 7, 2023, © Leeham News: Maintenance costs and lead times have been a growing topic in aviation circles and financial markets since last month’s Aviation Week MRO Europe conference in Amsterdam.
Wage and commodity inflation have been widely identified as key cost drivers in many regions. However, this has been compounded by ongoing part shortages, deferred maintenance from aircraft flown less than normal in 2020-2022, and the retention of older aircraft to maintain capacity in the face of new-generation engine reliability issues and resulting groundings.
Even the Financial Times recently covered the impact of MRO constraints. Consultant Kevin Michaels of AeroDynamic Advisory told the FT that airline maintenance spending had ballooned from a historic 8%-10% of airline costs to an estimated 14% this year.
Source: Aviation Week.
Summary
- Aircraft availability limits options for carriers, spares providers.
- Spares availability further limited by commodity shortfalls.
- Labor constraints evolve from headcount to experience and productivity.
- Sustainability panel long on possibilities, short on deliverables.
Embraer’s 3rd Quarter 2023 results contain good news
By Bjorn Fehrm
November 6, 2023, ©. Leeham News: Embraer presented its 3Q2023 results today. Commercial aircraft deliveries increased by 50% to 15 E-Jets compared with 10 jets in 3Q2022, and Executive jets delivered 28 jets versus 23 for 3Q2022.
Revenue for the group increased by 38% to $1,284m ($929m) for the quarter. The Services side increased revenue by 24% to $366m ($295m). The Defense revenue was up 40% to $133m($95m).
EBIT was $84m versus $11m for the same quarter last year. The company retained the 2023 guidance to deliver 65-70 E-jets and 120-130 Executive jets for the year.